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Health Spending Growth by Income Cohort

By July 27, 2016Commentary

Our national health spending growth slowed in the last decade, but did it slow equally across all income groups?  That is the question asked by research carried in Health Affairs.  (HA Article)   The authors looked at periodic surveys on health spending from 1963 to 2012.  They divided the population into income quintiles for each survey and compared constant dollar health spending over the survey time period for the quintiles.  They examined trends in subcategories of services and by payment source.  The researchers attempted to adjust spending by health status and other factors.  Aside from the survey-based nature of the data, there are other circumstances that warrant careful interpretation of the data.

Per capita health expenditures grew 549% between 1963 and 2012, after adjustment for inflation.  Medical spending for the lowest income quintile grew most rapidly in the early decades and was highest on a per capita basis from around 1975 to 2003.  The three middle quintiles and the highest income quintile had relatively similar growth and spending through 2003.  In recent years, spending on the highest income quintile has grown most rapidly and is significantly above spending by the other quintiles which are roughly equivalent.  Almost all the divergence is explained by persons under age 65 on commercial health plans.  One obvious factor, not mentioned by the researchers, in why spending on low-income people appears to have plateaued is that Medicaid provider payment rates have been much lower than those in private plans.  Since the unit costs for most of the services received by low-income patients is lower, you would expect spending, after adjustment for health status, to be lower.

These authors should be well-recognized as single-payer ideologues, so they naturally twist the data to suggest that poorer people are getting less health care.  But they did no analysis of utilization trends and as states above, it is almost certainly unit cost differences that account for the different trends of spending.  Other data suggest that there has not been significant differences in utilization trends; if anything the poorer quintile has far less exposure to rising health costs, since Medicaid has few or no cost-sharing provisions.  Note that there is no trend difference by quintile in Medicare, which pays the same unit cost for all beneficiaries. The higher recent spending by the wealthy quintile under age 65 probably reflects a better ability to bear the increased cost-sharing in commercial plans.

This is a great example of how ideologues twist data to fit their view of the world, rather than doing a truly thorough analysis.

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